Pfizer ( PFE)? Maybe, except Pfizer bought Coley Pharmaceuticals seeking to develop an immune-boosting therapy against lung cancer. That drug failed in phase III studies, despite posting very strong results in phase II. Will Peregrine prove to be too much deja vu for Pfizer? Eli Lilly's ( LLY) drug research efforts are an embarrassment so Peregrine could find a receptive audience in Indianapolis. Then again, a partnership with the drug development clowns at Lilly might be the kiss of death for bavituximab. The bavituximab phase III study in second-line lung cancer sounds like it will be designed to mimic the results from the phase II study presented Friday. The only major difference will be size and geography. Peregrine expects to enroll 300-500 patients from the U.S. and Western Europe. My colleague Nate Sadeghi had a smart take on Peregrine this morning. He's a bavituximab skeptic, like me, but feels shorting the stock now is too risky. "Overall, I'm very skeptical of the results," Sadeghi writes. "Unfortunately, the data don't contain a definitive smoking gun. That could be bad news for the bears, especially given Peregrine's modest market capitalization and the absence of any clear near-term negative catalyst. The company will almost surely initiate Phase III trials, which will take years to produce any data, and I'm not convinced failure in front-line NSCLC will be enough to convince the bulls to sell. The most bullish investors may even start to believe in the potential for accelerated FDA approval of the drug in the second-line setting, although I think that would be extremely unlikely. Nonetheless, my experience suggests that even wildly misplaced hope can drive a $470 million market capitalization towards $1 billion or more over time." He concludes on owning or shorting Peregrine: "Sometimes it pays to not play." Agreed. --Written by Adam Feuerstein in Boston. >To contact the writer of this article, click here: Adam Feuerstein. >To follow the writer on Twitter, go to http://twitter.com/adamfeuerstein. >To submit a news tip, send an email to: email@example.com. Follow TheStreet on Twitter and become a fan on Facebook.
In trading on Thursday, shares of Peregrine Pharmaceuticals Inc.'s 10.50% Series E Convertible Preferred Stock were yielding above the 12% mark based on its quarterly dividend (annualized to $2.625), with shares changing hands as low as $20.34 on the day. As of last close, PPHMP was trading at a 11.40% discount to its liquidation preference amount.